Business Essentials 9th Edition PDF

 The U.S. Business Essentials Business 9e Environment Ebert/Griffin chapter one  After reading this chapter, you should be able to: 1. Define the nature of U.S. business and identify its main goals and functions. 2. Describe the external environme...

 The U.S. Business Essentials Business 9e Environment Ebert/Griffin chapter one  After reading this chapter, you should be able to: 1. Define the nature of U.S. business and identify its main goals and functions. 2. Describe the external environments of business and discuss how these environments affect the success or failure of any organization. 3. Describe the different types of global economic systems according to the means by which they control the factors of production. 1-3 Copyright © 2013 Pearson Education  After reading this chapter, you should be able to: 4. Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 5. Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 1-4 Copyright © 2013 Pearson Education  The Concept of Business and the Concept of Profit Business └ organization that provides goods or services to earn profits Profits └ difference between a business’s revenues and its expenses 1-5 Copyright © 2013 Pearson Education  Dimensions of the External Environment 1-6 Copyright © 2013 Pearson Education  The External Environment of Business External Environment └ everything outside an organization’s boundaries that might affect it 1-7 Copyright © 2013 Pearson Education  Economic Systems Economic system └ a nation’s system for allocating its resources among its citizens, both individuals and organizations 1-8 Copyright © 2013 Pearson Education  Factors of Production Factors of production └ the resources that a country’s businesses use to produce goods and services 1-9 Copyright © 2013 Pearson Education  Types of Economic Systems Planned Economy └ economy that relies on a centralized government to control all or most factors of production and to make all or most production and allocation decisions └ Communism, socialism 1-10 Copyright © 2013 Pearson Education  Types of Economic Systems Market economy └ individual producers and consumers control production and allocation by creating combinations of supply and demand 1-11 Copyright © 2013 Pearson Education  Types of Economic Systems Mixed market economy └ features characteristics of both planned and market economies Privatization └ process of converting government enterprises into privately owned companies 1-12 Copyright © 2013 Pearson Education  Demand and Supply in a Market Economy  Demand  Supply └ the willingness and └ the willingness and ability of buyers to ability of producers to purchase a product offer a good or service (a good or a service) for sale 1-13 Copyright © 2013 Pearson Education  Demand and Supply 1-14 Copyright © 2013 Pearson Education  Demand and Supply 1-15 Copyright © 2013 Pearson Education  Private Enterprise and Competition in a Market Economy Private enterprise system └ one that allows individuals to pursue their own interests with minimal government restriction └ private property rights, freedom of choice, profits, and competition 1-16 Copyright © 2013 Pearson Education  Private Enterprise and Competition in a Market Economy 1. Private property rights └ ownership of the resources used to create wealth is in the hands of individuals 2. Freedom of choice └ you can sell your labor to any employer you choose 1-17 Copyright © 2013 Pearson Education  Private Enterprise and Competition in a Market Economy 3. Profits └ the lure of profits leads some people to abandon the security of working for someone else and assume the risks of entrepreneurship 4. Competition └ occurs when two or more businesses vie for the same resources or customers 1-18 Copyright © 2013 Pearson Education  Degrees of Competition 1-19 Copyright © 2013 Pearson Education  Degrees of Competition For perfect competition to exist, two conditions must prevail: 1.all firms in an industry must be small, and 2.the number of firms in the industry must be large 1-20 Copyright © 2013 Pearson Education  Perfect Competition 1. The products of each firm are so similar that buyers view them as identical to those of other firms. 2. Both buyers and sellers know the prices that others are paying and receiving in the marketplace. 3. Because each firm is small, it is easy for firms to enter or leave the market. 4. Going prices are set exclusively by supply and demand and accepted by both sellers and buyers. 1-21 Copyright © 2013 Pearson Education  Degrees of Competition Monopolistic Competition └ market or industry characterized by numerous buyers and relatively numerous sellers trying to differentiate their products from those of competitors 1-22 Copyright © 2013 Pearson Education  Degrees of Competition Oligopoly └ market or industry characterized by a handful of (generally large) sellers with the power to influence the prices of their products 1-23 Copyright © 2013 Pearson Education  Degrees of Competition Monopoly └ market or industry in which there is only one producer that can therefore set the prices of its products Natural Monopoly └ industry in which one company can most efficiently supply all needed goods or services 1-24 Copyright © 2013 Pearson Education  Economic Indicators Economic indicators └ statistics that show whether an economic system is strengthening, weakening, or remaining stable └ help assess the performance of an economy 1-25 Copyright © 2013 Pearson Education  Economic Growth, Aggregate Output, and Standard of Living Business cycle └ the pattern of short-term ups and downs (or expansions and contractions) in an economy Aggregate output └ the total quantity of goods and services produced by an economic system during a given period └ primary measure of growth in the business cycle 1-26 Copyright © 2013 Pearson Education  Economic Growth, Aggregate Output, and Standard of Living Standard of living └ the total quantity and quality of goods and services that they can purchase with the currency used in their economic system 1-27 Copyright © 2013 Pearson Education  Gross Domestic Product Gross domestic product (GDP) └ refers to the total value of all goods and services produced within a given period by a national economy through domestic factors of production └ measure of aggregate output 1-28 Copyright © 2013 Pearson Education  Gross Domestic Product Gross national product (GNP) └ refers to the total value of all goods and services produced by a national economy within a given period regardless of where the factors of production are located 1-29 Copyright © 2013 Pearson Education  GDP and GDP per Capita 1-30 Copyright © 2013 Pearson Education  Gross Domestic Product  Nominal GDP  Purchasing Power └ gross domestic Parity product (GDP) └ the principle that measured in current exchange rates are set dollars or with all so that the prices of components valued at similar products in current prices different countries are about the same 1-31 Copyright © 2013 Pearson Education  Productivity Productivity └ measure of economic growth that compares how much a system produces with the resources needed to produce it 1-32 Copyright © 2013 Pearson Education  Productivity Balance of trade └ the economic value of all the products that a country exports minus the economic value of its imported products └ Positive or negative balance National Debt └ the amount of money the government owes its creditors 1-33 Copyright © 2013 Pearson Education  Economic Stability  Stability  Inflation └ condition in which the └ occurs when amount of money widespread price available in an increases occur economic system and throughout an the quantity of goods economic system and services produced in it are growing at about the same rate 1-34 Copyright © 2013 Pearson Education  Economic Stability Unemployment └ the level of joblessness among people actively seeking work in an economic system 1-35 Copyright © 2013 Pearson Education  Economic Stability Recession Depression └a period during └a prolonged and which aggregate deep recession output, as measured by GDP, declines 1-36 Copyright © 2013 Pearson Education  Managing the U.S. Economy Fiscal Policies └ policies used by a government regarding how it collects and spends revenue Monetary Policies └ policies used by a government to control the size of its money supply 1-37 Copyright © 2013 Pearson Education  Managing the U.S. Economy Stabilization Policy └ government economic policy intended to smooth out fluctuations in output and unemployment and to stabilize prices 1-38 Copyright © 2013 Pearson Education  Applying What You’ve Learned 1. Define the nature of U.S. business and identify its main goals and functions. 2. Describe the external environments of business and discuss how these environments affect the success or failure of any organization. 3. Describe the different types of global economic systems according to the means by which they control the factors of production. 1-39 Copyright © 2013 Pearson Education  Applying What You’ve Learned 4. Show how markets, demand, and supply affect resource distribution in the United States, identify the elements of private enterprise, and explain the various degrees of competition in the U.S. economic system. 5. Explain the importance of the economic environment to business and identify the factors used to evaluate the performance of an economic system. 1-40 Copyright © 2013 Pearson Education  1-41 41 Copyright © 2013 Pearson Education